Coffee Market Report
| The authorities in Sumatra which is the largest coffee producing island of Indonesia have revised upwards by 2,778 bags their previously reported robusta coffee exports for the month of May, which they now report were 245,108 bags for the month. This figure equating to a 63,130 bags or a 34.69% increase in exports over the same month last year.
The Brazil government have sold 7,260 bags or 74.48% of the approximately twenty year’s old aged federal retention coffee stocks in an auction yesterday, at an average price of 65.81 usc/Lb., which offers a significant discount to the domestic roasters who shall absorb these coffees. However while the prices are cheap, the volume is modest and has no impact upon the prices that farmers can demand within the internal market for past crop stocks and new crop coffees. The largest coffee cooperative in Brazil Cooxupe have reported that as at Friday last week their farmers had harvested 11.3% of their new crop arabica coffees, with the harvest volumes now starting to pick up and heading towards a peak by the second half of next month. Noting that this percentage is significantly behind the 27.5% factor at the same time last year, but one might comment that this is most likely due to the timing of flowerings towards the new crop in September and October last year and perhaps to some degree to the unusually dry spell in January this year that might have contributed to retarding cherry maturity. Following this the respected Brazil analyst Safras & Mercado have reported that with the new conilon robust coffee harvest having already peaked and the new arabica coffee harvest now picking up, that by Tuesday this week 42% of their estimated at 50.4 million bags new crop had been harvested. They too making note that this is well below the 52% factor at the same time last year, but with comment that with the prevailing mostly dry weather that shall continue to the end of this month, that this harvest shall pick up in volume. In the meantime and with the new crop coffees coming in more slowly than usual and exporters holding forward sales commitments in hand and to cover, it is assisting farmers to hold back for relatively firm prices for new crop arabica coffees within the internal market in Brazil. This is for the meantime contributing to Brazil exporters having to demand relatively firm differentials for new business, but with exporters presently selling into the relatively lower demand summer holiday season for the main northern hemisphere consumer markets. The arbitrage between the markets has broadened yesterday to register this at 53.50 usc/Lb., while this equates to a still attractive to roasters 39.60% price discount for the London robusta coffee market. This arbitrage continues to inspire some degree of consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparatively firm arabica coffee prices. The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 2,550 bags yesterday; to register these stocks at 2,146,256 bags. There was meanwhile a smaller in volume 529 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 43,986 bags. The Certified Robusta coffee stocks held against the London market were seen to increase by 38,167 bags over the two weeks of trade leading up to Monday 22nd. June, to register these stocks at 3,110,667 bags. These stocks so long as Vietnam continues with internal market price resistance that many estimate has the internal market still holding in excess of 35% of the last harvest in stock, are unlikely to show any substantial increase and rather for the present, attract consumer roaster interest for nearby and price competitive fill in coffee supply. But might however surge in volume during the last quarter of the year, should more aggressive and price competitive selling start to come into play in August and September in Vietnam, ahead of the forthcoming and potentially larger new Vietnam crop. The commodity markets had another mixed day yesterday but with sufficient buoyancy within selected markets, to assist the overall macro commodity index to show a degree of buoyancy. The Natural Gas, Cotton, Wheat and Corn markets had a day of buoyancy and the New York arabica Coffee, Orange Juice, Gold and Platinum markets were steady for the day, while the Oil, Sugar, Cocoa London robusta Coffee, Copper and Silver markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.44% higher to see this Index registered at 424.30. The day starts with the U.S. Dollar steady and selling at 1.574 to Sterling and 1.120 to the Euro, while North Sea Oil is showing a degree of buoyancy in early trade and is selling at 60.70 per barrel. The London market and New York markets started the day yesterday on a modestly softer track and took this hesitant path into the afternoon trade and with a brief flurry within positive territory for both markets, prior to coming under increased selling pressure and dipping back into negative territory. The London market continued to end the day on a softer note and with 57.6% of the earlier losses of the day intact, while the New York market recovered from its earlier lows and ended the day on a steady note. The ability of the New York market to finally hold on to its gains of Thursday might prove to be somewhat supportive for sentiment and to encourage a degree of hesitant buoyancy for early trade today against the prices set yesterday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. JUL 1884 – 23 JUL 133.33 + 0.05
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